SEC to grow Non- interest products by 25% market capitalization

The Securities and Exchange Commission (SEC) has revealed that it is planning to grow non-interest capital market products by 25 per cent of the overall market capitalization.

This disclosure was made yesterday by the Director General of SEC, Mr. Mounir Gwarzo in Abuja at a round table meeting with a delegation led by the Lord Mayor of London Alderman Alan Yarrow and Nigerian Regulators.

Gwarzo who was represented by Executive Commissioner Corporate Services, Zakawanu Garuba, stated that, "our goal is to boost non-interest capital market product innovation so that the segment can be at least 25 per cent of the overall market capitalization.”

He disclosed that SEC wants "to build a strong regulatory regime for non-interest products, encourage stakeholders in the non-interest capital market and ensure the emergence of Nigeria as a prominent non-interest capital market hub both at the regional level and globally."

He further stated that the SEC was considering modalities for setting up a Sharia Advisory Council as a body of experts to advise on non-interest product applications.

To boost liquidity of non-interest products the SEC he added is "working with a committee to support the FMDQ platform to enable secondary market trading of the products. We are also engaging the Central Bank of Nigeria (CBN) to obtain liquidity status for non-interest products (especially the sukuk)."

All these efforts he noted are hinged on the fact that "Nigeria has more than 80 million Muslims compared to Malaysia’s total population of 30 million. In addition, Nigeria has a larger economy than Malaysia’s, being the largest economy in Africa."

To harness this potential, the DG of SEC said proper planning was imperative which was "why at the SEC we set up an industry-wide Committee of experts last year to produce a 10-year master plan on non-interest capital market product.

Their recommendations have been incorporated into the broader capital market master plan which we have begun implementing. There have been many successful examples of market development through implementation of master plans and we are confident that our own master plan objectives will be achieved as well over the next decade." he said.

Inspite of the immense opportunity present in non-interest products, the DG of SEC lamented that Nigeria is faced with the challenge of lack of capacity.

Responding, the Lord Mayor of London, Alderman Yarrow, pledged the United Kingdom's government support stressing that "two things were universally agreed on, Islamic finance will be massive and it's here to stay."

Yarrow expressed concerns that, "the difficulty of defining what Islamic finance actually is, is with different scholars and different countries supporting different rules. That is equally true here in Nigeria with about 88 million Muslims and 39 per cent of the adult population unbanked."

He said there "is a huge opportunity to offer Islamic finance as an alternative investment and finance model for both Muslims and non Muslims alike."

Nigeria's Exchange he said has a crucial role to play in that story since it is the second largest Exchange in sub-Saharan Africa describing it as "the Gateway to African markets and as such, the whole of Africa, to some extent, relies on Nigeria."

He called on members of the Nigerian capital and financial derivatives markets to talk to him, "and the business delegation and TheCityUK. Whether it's about Islamic Finance, Legal services or education, training and qualifications. That's why we are here. And we all look forward to helping you in whatever way we can."